Crude oil prices closed sharply higher in futures market on Tuesday thanks to a weakened dollar, supply disruption in Libya and the latest comments from officials suggesting OPEC could extend its deal cutting global production.
As a result, China became the third biggest overseas destination for USA crude oil in 2016, according to data from the Energy Information Administration (EIA), up from ninth position the previous year.
Oil and gas stocks are on the move on Wednesday thanks to a rebound in crude prices on a smaller-than-expected inventory build.
West Texas Intermediate (WTI) crude oil, the main United States benchmark, was trading 0.01% lower at $53.98 per barrel recently while Brent crude, the worldwide gauge, was 0.02% higher at $56.52 per barrel. The global benchmark crude climbed 58 cents, or 1.1 percent, to $51.33 on Tuesday.
As OPEC and especially Saudi Arabia cut production, producers not participating in the accord have been quick to fill the supply gap and gain market share. May Brent crude LCOK7, -0.53% on London's ICE Futures exchange rose 11 cents to $52.50.
ANZ reported today that prices were supported by Libyan oil output supply slipping to about 5,00,000 barrels per day, due to shutdown of pipelines from its biggest field.
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Following the removal of restrictions on US crude oil exports in December 2015, the United States exported crude oil to 26 different countries in 2016, compared with 10 countries the previous year.
Gasoline inventories on the other hand fell by 3.7m barrels, while those of distillates decreased by 2.5m barrels.
Elsewhere, the U.S. West Texas Intermediate crude May contract reached a session peak of $49.98 a barrel, also the highest since March 10. Refineries processed 16.2 million barrels a day of crude last week, up 425,000 barrels from the prior week, according to the EIA.
As armed protesters block the Sharara and Wafa oilfields in Libya, oil production in the country has fallen by more than 250,000bpd this week. Even though oil exports have increased, growth in US crude oil exports has slowed significantly from its pace from 2013 to 2015, when annual USA crude oil production grew rapidly.
The OPEC-led strategy to rebalance oil markets is not without controversy, however.
Regardless, booming shale production and the lifting of a ban on USA crude exports has opened up new markets, flows and opportunities for traders. Non-OPEC countries pledged to cut about half as much.